Financial stress and anxiety can cause trouble in your life, manifesting in various ways. Almost everyone may feel stressed about money from time to time. However, this anxiety has the potential to compound and can disrupt your daily life, causing you to lose sleep.
Here's the good news: You can strategize and take steps to help alleviate—and maybe even overcome—that stress. Read on for more information about money-related anxiety and a list of steps you can take to ease it.
What is financial anxiety?
In the most basic sense, financial anxiety is worry and fear about your financial situation. Research from the American Psychological Association showed that 65% of Americans report
There are two types of financial anxiety for many people: everyday financial stress and financial stress that's triggered by an event.
Everyday financial stress
Most people encounter everyday financial worry or stress at times. You know the feeling if you've struggled to
These events can undoubtedly cause stress. You may have to tighten your belt for a little while to cover these costs, but as you get a handle on them, that stress can start to dissipate.
Some common examples of everyday stress may include:
- You're struggling to manage your finances. You're finding it hard to cover all of your bills on time.
- You have a lot of debt. Student loans and other debt may feel overwhelming, and you may struggle to pay them or see a light at the end of the tunnel.
- You have unhealthy spending habits. Sometimes stress can end up driving you into overspending, exacerbating existing financial unease.
- You don't have an emergency fund. An emergency fund can help cover unexpected bills or pay expenses if income can't cover them.
Financial stress triggered by an event
Another common type of financial anxiety comes from a change in your life. The last few years have been a strong example: With the COVID-19 pandemic, many people lost their jobs, faced reduced hours or got sick—dramatically impacting their finances.
These types of stress, from the loss of a job, high inflation or market volatility, can leave people to worry over their finances during the short to intermediate term.
Some common examples may include:
- You lost your job. It's been difficult to find a new one, and a loss of income—especially over a few months—can set you back financially.
- You've experienced losses in the market. Watching your retirement investments go down during a market dip can certainly induce anxiety.
- You have serious medical expenses. Many people struggle with medical bills after getting sick, derailing savings or depleting emergency funds.
- You don't feel confident about the future. Instead, you worry that you don't have enough for retirement or your kids' college funds.
The Consumer Financial Protection Bureau
How to start managing your financial stress
Overcoming financial anxiety can feel daunting, but you can take steps to start turning things around, including
First, realize it's a process that takes time. You likely won't be able to turn things around overnight, but consistently moving forward in the right direction every day can start to make a difference.
Here's where to start.
1. Identify the underlying causes of your stress
Many people have different relationships with money, which often unknowingly trigger stress. You may need to dig deeper to get to the source of these anxieties.
For instance, the way your parents dealt with money or your experiences with it growing up could still play a role in how you manage your money today. Or maybe you feel like you don't have the
Working with a counselor or therapist may help you find some of the underlying causes of your financial anxiety, which can help you begin addressing them.
2. Your current financial situation
This part may feel scary, but it's hard to develop a plan if you aren't sure exactly where you stand financially. Start by tracking your spending for a month or two, which can help you
Also, review your debts. Look at your current bank and credit statements to note the amounts you owe, and identify which have high interest rates. That can help you determine which bills you may want to tackle first.
3. Look at your top sources of stress
Once you have a complete picture of your finances, identify a few key areas driving most of your stress. Those may be the areas you want to work on first and create a plan around. Then, as you start to handle those top fears, you can continue working down the list.
For example, if you have a lot of anxiety about losing a job, you may want to focus on
4. Create a plan
Building an action plan can help you start to feel better. Sometimes, not knowing exactly what to do ends up being a large source of stress. You may want to start small: Get a monthly budget and stick to it.
Then, determine how to
5. Track your progress
Improving your finances is often a lifelong process, and detailed and consistent tracking can help. It lets you
Financial stress can overtake your mental health. So, as you start tackling your finances, it's also important to let yourself feel good that you're making progress. When you pay off a bill, improve your credit score, or add to your emergency or retirement funds, pat yourself on the back for a job well done.
6. Speak with a financial advisor
If you aren't sure where to start with your plan, consider speaking with a financial advisor. Your financial advisor will navigate your finances with you, listen to your fears and short- and long-term goals, and help you create a plan to get your finances in order.
Together, you can work on your action plan. When you meet with your financial advisor consistently, they can help you stay on track and make any needed adjustments over time.
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